Argentex Group plc (LON:AGFX) Chief Executive Officer Harry Adams caught up with DirectorsTalk for an exclusive interview to discuss their latest trading update, how its growth strategy is working, new transactional banking division, virtual IBANs and key growth drivers for 2024.
Q1: Harry, Argentex trading update just released and the markets have been extremely volatile just lately. How has the core business performed?
A1: The stock markets have been relatively volatile but actually the currency markets have been quite benign. There’s been a steady move against the dollar and the sterling seems to be recovering from the mini budget towards the end of the year.
Actually, if you look at the three month implied volatility on sterling dollar and sterling euro, it’s back down to 2021 lows. So, although volatility is helpful for this business, it’s certainly not imperative for growth.
We’ve demonstrated that the business can flourish in any market backdrop but in terms of the core business, the majority of our clients are corporate and institutions, they tend to be on the more sophisticated end of the market. We help those clients with hedging but also, we’re here to undercut the banks in terms of spot transactions.,
So, the demand for our products has been steadily growing over the last 12-18 months since we overhauled our strategy and, as we expand over to Europe and we launch new products, we expect that trend to continue.
Q2: You did present a clear growth strategy and one pillar is to invest in technologies and products, are you winning new clients as a result of growing your online platform? Has it helped to win a greater share of customer wallets?
A2: Yes, absolutely. I think we’ve learned a lot from our journey both being from the early days of the startup through to the IPO in 2019 and going through a lot of black swan events in the last 4 years or so.
I think looking back, one of the improvements I would have made, given my time again, is to invest more heavily in technology a little bit earlier. We took the decision back in 2021 to overhaul the strategy and a lot of the investment is going into technology and that’s really what the clients expect from a business operating in this day and age.
So, we now have that all singing, all dancing technology platform which is capable of facilitating both the corporate end of the market but also the institutional end of the market. You’ve got to appreciate that the technology strategy never really ends, it is always evolving but as we are investing more, we’re able to garner more client wallets and market share.
Q3: Now, you’ve recently launched a new alternative transaction banking division, can you just remind us of what that is and is it getting the traction that you expected?
A3: Our core business since inception has been currency management so that is helping corporates and institutions navigate the foreign exchange markets. We’ve now launched the alternative banking product that really compliments the currency management.
So, what effectively that is, is an online platform, it’s an offering for clients to log on, they’re able to hold 15 currencies under one account number in their name, and they can move currency and payments between different companies within their group. What it’s there to do is take out the requirement for high street bank where let’s be honest, the banks don’t really want that transactional business, they don’t make any money off the back of it.
So, we’re able to onboard clients very quickly, just from the KYC that we require and it gives the clients the ability to pay in and pay out, as I say, from 15 different currencies.
Q4: why is the award of a virtual IBAN key to driving growth across Europe, and are there many other providers who can offer that?
A4: A virtual IBAN is there to provide one account number that can hold 15 currencies which is great for both corporates and institutions for different reasons.
In terms of Europe, they are slightly behind the UK in this technology. We took the decision back in 2020 to have a gold standard regulation in Europe that comes from the Dutch National Bank (DMB) so with that, we are now able to provide our European clients with a Dutch virtual IBAN which again, is the gold standard of European regulation.
That actually allows to garner more clients as they’ll probably prefer to have a Dutch IBAN as opposed to some of the grey regulators across Europe. It actually makes us only one of three non-bank providers of virtual IBANs in Europe.
You are seeing a couple of competitors, not really competitors, they just operate in the similar space but more on the smaller SME side, they’re making some great traction over in Europe just by offering these credible virtual IBANs. So, we are very excited about the possibilities across Europe.
Q5: Finally, what will be the growth drivers for 2024 and beyond for Argentex?
A5: I guess that comes back to our strategy, which is along with people, product, technology, and places.
We have invested very heavily into our technology and product over the las t24 months or so, and now we’re slowly but surely setting up different offices across other jurisdictions. Our Australian office is live, we’re still waiting for that final rubber stamp from the Australian regulator, we’re expecting that anytime soon, although I have been saying that for 3 or 4 months now, but it is absolutely imminent.
So, really what we’re doing is just pushing these new products across different jurisdictions, we’ve invested heavily into our CRM platform that now allows us to seamlessly go into new markets without having that initial investment in time. What we found was when we first went into Europe, it was quite evident that the platform, the foundations that we built in London didn’t really suit that move into Europe. So, we spent a lot of money and a lot of time in making sure our platform, our CRM is now scalable and we can push it into new territory seamlessly.
